Goodbye 2008! 2009 Outlook

Happy New Year! Another year passed us by and what a year it was. With the melt down of the credit market the residential building and remodeling world has changed. Many projects that homeowners had anticipated starting last year were either canceled or put on hold until the sky's clear. It is my belief that the next three quarters will continue to be very challenging times in the construction industry. Until the credit markets free-up and the excess supply of housing stock works through our market, we will not see any kind of sustainable recovery.

New construction permits are at an all time low in Maricopa County, which will help with the over all supply. Unfortunately most of the recent sales are REO properties and the stock of REO properties continues to grow. The banks need to get realistic about pricing. Homeowners who do need to sell their homes now, need to price for today's market, not 2006. If you don't need to sell now you shouldn't have your house on the market. Many of the homes for sale could not be built for what they are selling for which is a great value to potential buyers. That being said, I would caution any buyer of a custom home that was built in the last two - three years. Many were very poorly executed by inexperienced "builders" who may not be around any longer.

Looking forward, I see the next quarter being on the slow side. We are working on a few small remodeling projects ranging from building custom doors and cabinets for houses in Carefree and Scottsdale to a new project in Desert Mountain consisting of a major remodel on the kitchen and two bathrooms. We have been in talks on projects that we expect to start this spring including a new luxury kitchen remodel in Carefree, a new custom home in Carefree on Black Mountain and a twenty thousand square foot office building in Scottsdale.

We are actively looking for other remodeling companies to acquire in this market, allowing us to build a larger and stronger organization and utilize our economies of scale, ultimately giving our clients the most value for their dollar. By the end of 2010, I am predicting that we will be in a stable market (with much higher inflation) and our Remodeling Division will be one of the largest (in terms of revenue) in the Valley.

Keep a positive attitude and this too shall pass!